Bounce-back helps economy

Production of goods, services rises as robust growth is forecast

Associated Press

Published 8:01 pm, Wednesday, July 30, 2014

Photo: Seth Perlman

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In this July 17, 2014 photo, construction workers build a commercial complex in Springfield, Ill. The government issues its first of three estimates of how fast the U.S. economy grew in the April-June quarter on Wednesday, July 30, 2014. (AP Photo/Seth Perlman) ORG XMIT: NYBZ149 less

In this July 17, 2014 photo, construction workers build a commercial complex in Springfield, Ill. The government issues its first of three estimates of how fast the U.S. economy grew in the April-June quarter ... more

Photo: Seth Perlman

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In this July 29, 2014 photo, jeweler Murray Cadenhead works on repairing a piece of jewelry at Perry's Fine Jewelers on Independence Boulevard in Wilmington, N.C. The government issues its first of three estimates of how fast the U.S. economy grew in the April-June quarter on Wednesday, July 30, 2014. (AP Photo/The Star-News, Mike Spence) ORG XMIT: NCWSN201 less

In this July 29, 2014 photo, jeweler Murray Cadenhead works on repairing a piece of jewelry at Perry's Fine Jewelers on Independence Boulevard in Wilmington, N.C. The government issues its first of three ... more

Photo: Mike Spencer

Bounce-back helps economy

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Washington

The U.S. economy has rebounded with vigor from a grim start to 2014 and should show renewed strength into next year.

That was the general view of analysts Wednesday after the government estimated that the economy grew at a fast 4 percent annual rate in the April-June quarter. Consumers, businesses and governments joined to fuel the second-quarter expansion. The government also said growth was more robust last year than it had previously estimated.

Whether the healthier expansion will lead the Federal Reserve to raise interest rates sooner than expected is unclear. In a statement it issued Wednesday after a policy meeting, the Fed offered no clearer hint of when it will start raising its benchmark short-term rate.

The economy sprang back to life after a dismal winter in which it shrank at a sharp 2.1 percent annual rate. The government upgraded that figure from a previous estimate of a 2.9 percent drop. But it was still the biggest contraction since early 2009 in the depths of the Great Recession.

Last quarter's bounce-back reinforced analysts' view that the economy's momentum is extending into the second half of the year, when they forecast annual growth of around 3 percent.

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The government also updated its estimates of growth leading into this year. They show the economy expanded in the second half of 2013 at the fastest pace in a decade and more than previously estimated. The revised data also show that the economy grew faster in 2013 than previously estimated, though more slowly in 2011 and 2012 than earlier thought.

The second quarter's growth in the gross domestic product — the total output of goods and services — was the fastest since a 4.5 percent increase in July-September quarter of 2013.

At the same time, a higher trade deficit slowed growth as imports outpaced an increase in exports.